The horizon is not so far as we can see, but as far as we can imagine

Consequences of the Canadian Liberal Majority

Justin Trudeau

Justin Trudeau

Justin Trudeau’s Liberal Party won a majority government. Former Prime Minister Stephen Harper has stepped down as Conservative party leader. As of this writing, Thomas Mulcair has not stepped down as NDP leader.

The election started with the NDP in the lead, primarily due to the Liberal Party having voted for the police state bill C51. The NDP ran to the center, the Liberals ran (somewhat) to the left. NDP’s lead narrowed, then they were neck and neck until the Conservative party and Bloc Quebecois used the Niqab as a wedge issue. You can read a summary of the campaign here.

So what does this mean going forward?

A great deal will depend on how Trudeau rules. (A majority Canadian PM is essentially an elected dictator).

Trudeau has promised to repeal C51 and reintroduce a similar bill, minus the worst bits of C51. Note that Trudeau has repeatedly stated he voted for C51 as a matter of principle, so some of the nasty will remain.

Pipelines are a go. TPP is a go (though the NDP was not great on either of those issues, they were better than the Liberals).

National Pharmacare and Daycare will not happen.

Certain regressive tax changes, like income splitting, are gone. Expect another tax cut for the “middle class,” which it doesn’t particularly need.

Expect the muzzling of scientists to end, and the long-form census form to return. (Conservatives got rid of the longer census form and made the census non-mandatory, turning its data, essentially, to meaningless crap.)

Moving away from the First Past the Post-electoral system: The NDP and Liberals had both said they intended to do something along these lines. But with a Liberal majority government in power, this is very much in question. I will be pleasantly surprised if Trudeau doesn’t bury this in a committee.

The Economy

The brutal truth about the Canadian economy is that it is unlikely to recover significantly, though the recession will end.

I’ve written about the Canadian mixed economy in the past, but the bottom line is that Harper doubled down on resource extraction–especially oil. Manufacturing was gutted during the period of high oil prices and a strong Canadian dollar and will not recover naturally during a weak dollar period. This is because those who took advantage the last time were burned so badly most of them went out of business.

Canada’s housing bubble is significantly worse than the US housing bubble in 2007. This bubble is government guaranteed.

So, at this point, Canada is a resource extraction economy with artificially high asset prices. It is a petro-state.

Trudeau is onside with this. Mulcair repeatedly talked about the mixed economy and how to return to it, and was a staunch and principled environmentalist. Trudeau has pandered repeatedly to the oil sector.

Given this, there are only two questions about the Canadian economy that matter:

  • Will the housing bubble endure?
  • Will oil prices rise, preferably above about $80US a barrel, which is the break-even price for much of the oil sands?

If you think the housing bubble will burst, you expect a financial crisis. If you think the answer to number two is no, then you think that the Canadian economy will not significantly improve under Trudeau.

Trudeau’s economic performance, in other words, is linked almost entirely to how China’s economy performs and the world price of oil–things over which he has no control.

The Next Election

The economy may get a lot better, but that doesn’t mean it may not bumble along sufficiently well for the Liberals to be re-elected. Contrary to Democratic party talking points, Obama never fixed the US economy. The percentage of people employed in the US never recovered and wages stagnated, but Obama was re-elected (the Democrats didn’t do as well in the House, but the House in America is gerrymandered).

Still, the NDP and Conservatives will likely have an opening in the next election. Whether they will be able to capitalize on it is unclear and, again, much depends on Trudeau’s performance. Right now, he is a blank slate upon whom many hopes have been written. But in four years, he will have a track record.

I don’t know if Mulcair will stay on as NDP leader. He was a strong and effective opposition leader, but he was neither on the campaign trail, and must shoulder responsibility for turning a first place start into a third place finish. He has lost all the gains made by the previous NDP leader, Jack Layton. (I believe Layton would have won this election. The cost of his death rises and rises.)

As for the Conservatives, expect one of the Ford brothers to run, among others. It will be a zoo. But the Conservatives held their prairie base and a good chunk of Ontario and BC. They were not wiped out, they just lost. They will remain a viable threat–especially if the electoral system remains the same.

Justin Trudeau is going to feel good, for a while, compared to Harper. He will be better. He will repeal some of Harper’s worst policies. He will also not be an offensive creep, and that matters.

But he is, at the end of the day, a believer in the neo-liberal consensus. He will run a kinder neoliberalism, but it will still be neoliberalism. He is not particularly committed to civil liberties, he had no principled opposition to Harper’s worst excesses (that was Mulcair), and there is no particular reason to believe he will make any sort of radical break from Conservative policies; he voted for a great many of them.

The bottom line is this: Justin showed his character when he supported C51. Mulcair showed his character when he went hard against it, even as polls showed a majority of Canadians were in favor of it (they later changed their mind, but he did what he did when it was unpopular).

I cannot find any great confidence in Trudeau, either as an ethical man, or as an economic leader.

Finally, despite the spin in the global and domestic press, this election is no great repudiation of Harper, or a collapse of the Conservative party, which maintained most of its voters. There has been no collapse, like what happened to the Progressive Conservatives after Mulroney. After nine years in power, it is normal for a party to lose power, and majority governments are the historical norm in Canada. This is a status quo flip between Canada’s two ruling parties.

Harper changed the nature of Canada’s government and economy, and created a unified Conservative Party. Trudeau will not undo most of Harper’s fundamental changes. Harper will go down as an important Prime Minister.

Stay tuned.


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13 Comments

  1. thwap

    Pretty sound analysis.

  2. vex

    Stephen Mulcair?

  3. Solid analysis. I’d add a couple of caveats.

    First, much as I might agree with you about Layton probably winning this election, I think it’s important to note that a lot of the good feeling towards him is predicated on the fact that no one really had a chance to get sick of him as leader of the opposition. As skillful of a politician as Jack was, it’s possible he would have ended up losing seats this time around. After all, Olivia Chow lost her riding and if there was anyone in the NDP who was likely to benefit from his memory, it was her. Counterfactuals are tricky things…but I still would have loved to see this election if he had been NDP leader.

    Second, I wouldn’t say all of the NDP’s gains were wiped out. They went from 37 seats in 2008 to 107 in 2011 and are back to 44. The utter electoral destruction of the Bloc was sustained and the BQ will only just barely get back to official party status. The NDP actually improved its share of the popular vote by 1.7 percentage points and gained a few seats in odd places like northern Saskatoon. One can make the argument that they didn’t improve enough given the opportunity, but this was not a catastrophic failure that some will try to make it into. The LPC’s majority is vulnerable from a flank to the left in Quebec in the next election, when losing 15 seats would be enough to drop them under the 170 seat threshold for a majority. Trudeau’s majority is solid enough to get him through to the next legally required election, but it’s certainly not reflective of the kind of hegemony the LPC has had historically.

    All in all, it was an interesting night and it’s a good thing Harper’s gone. It’s just a shame that Harperism will continue to linger over Canada.

  4. Harper’s vote cannot truly collapse: it is made in large part out of people who actively like what Harper has done and would choose it even if they understood the consequences. Everything else is about overcoming that giant thumb on the scale.

  5. To be clear that’s why I think that the significance of Harper’s vote not collapsing is easy to overstate: the likelihood that it would ‘collapse’ Mulroney-style was always extremely low.

  6. Ian Welsh

    Woops. Corrected Mulcair. That’s what happens when you write at 4 am.

    Yes, Mandos, we agree, actually. It’s just that people are acting as if this is a radical change in Canadian politics. Unless FPP the post is ditched, it isn’t. It’s a return to status quo switches between Canada’s two traditional ruling parties, in essence.

  7. Ian Welsh

    Cato: he would have lost seats if the NDP didn’t win, yes. I just think he would have run a much better campaign and won the election: minority or majority.

    To put it simply, Layton was better at hope/change/charisma than Trudeau. It would have been a direct competition between two people with the same sort of public persona/charisma and Layton was his better.

    People weren’t sick of Mulcair as leader of the opposition. They were actually impressed by him. It was in the campaign where he lost the election.

  8. wendy davis

    ‘Idle No More’s Assessment of 2015 Federal Election Party Platforms’

    http://www.idlenomore.ca/idle_no_more_s_assessment_of_2015_federal_election_party_platforms

  9. Doug McLeod

    I clearly come from the opposite end of the political spectrum that you do, but it’s not a bad analysis. I think you make some mistakes though. The first is continuing to think that Conservatives are ignorant mouth breathing imbeciles. Not that that feeling isn’t richly returned but Conservatives vote conservative because the economics work. To quote Churchill “Socialism is a philosophy of failure, the creed of ignorance, and the gospel of envy, its inherent virtue is the equal sharing of misery.” So in this case your more rational approach is appreciated but I’m not sure yet if there is common ground between the two mindsets. As well, when Trudeau V1.0 drove up unemployment by 400% and our national debt by a factor of 10 time,s it was realized that it was not sustainable – even by S&P. The reason that the Conservatives will remain a threat is because of that as much as anything. As the counterbalance to excess. And with apologies, the truth is that the NDP will never win Federal power is also because of that. The sole reason “Le bon Jack” got the votes he did was a fluke which coinsided with the collapse of the Bloc. This wasn’t so much a loss on Mulcair’s part as a return to their natural portion of the vote. As well, Klein’s “Leap Manifesto” scared the bejeezus out of people and off the NDP, but to repeat, not any great mistake by Mulcair. Trudeau won this election by a combination of factors – first, the Central Canadian hatred of Westerners – And please, no denials, it should come as no surprise – Preston Manning and Stockwell Day got the same treatment – but were less time in the spotlight. Second and lending credence to the first, is that Harper is a lousy front man for a political party. He is introspective, hates the mike, and is uncomfortable in public. Those traits, combined with the above bigotry made him an easy man to demonize (I mean really – they savage him because he shook his son’s hand on his first day to school???). Third and equally true was that he certainly played hardball – no more than Pere Trudeau and compared to Chretien he as a boy scout, but its pointless to give your enemies added ammunition. As well, the Unions functioned like US SuperPACs pouring money into the anti-Harper fest. If these SuperPacs are seen as dangerous in the States, they are equally dangerous here if not more so, as the Parties are more severely limited. And lastly because when you mix all that together, the enmity was finally so strong that once the vote started to shift behind Trudeau (and here I would agree that Mulcair was the more capable) then whether or not the complaints were valid or not, (and some certainly were) people left the NDP to ensure Harper’s defeat. While many won’t want to admit it as to do so would challenge their beliefs, Harper gave us very good economic governance through the greatest economic meltdown since the Crash of the 1920s, left us with the wealthiest middle class in the world, greatly increased our trade partners (essential for a resource based economy) and left us the most respected country in the world for the last 4 of 6 years. Harper may be an introvert, but he has absolutely no shame in his performance or legacy, nor in the condition he leaves the country. In fact watching his speech last night, it appeared he was almost overjoyed to be leaving Ottawa and heading back out west.

  10. Hugh

    “This is a status quo flip between Canada’s two ruling parties.”

    I agree. When Obama first ran for President, he too was a fairly blank slate. I think the blank slate is an electoral device. It allows the rubes to read into a candidate whatever they want while ignoring the obvious that they are voting for more of the same, just with different atmospherics. The way to look at Democrats and Republicans or Liberals and Conservatives is not in terms of the greater and lesser evil but as complementary evils. Either way evil wins.

    Bubbles always burst. Canada actually has two, oil and housing. The first has taken a hit and I wonder (I don’t follow it) how much state support the oil industry gets in Canada since it seems to be producing at prices considerably below costs. I would expect it’s a lot seeing as Canadian governments keep pushing the Keystone pipeline despite the collapse in prices.

    We used to joke watching Property Brothers that $350,000 would get you a doghouse in Canada, a small one, –that needed a lot of work. It’s hard to say, except when you are very close, when a bubble will go splat. I guess things to look for is if buyers start drying up and if rental prices start going up. Buyers can be homeowners or investors. Investors can mask a declining market. On the other hand, when they start leaving the ship you know you are in the last stage of the bubble. The thing to be thinking about now is how to manage a property bust. Do you refinance and bailout homeowners or, more likely as happened in the US, do you bailout the banks and investors without whom the bubble would never have happened?

  11. Declan

    Mostly agree.

    A few points:

    Legalizing marijuana will make a big difference, so it is a mistake to omit this in the analysis, even it doesn’t matter much from an ideological perspective.

    Creating a new tax bracket for incomes over $200,000 and revising child tax credits to be means-tested and reverting the TFSA limit from $10k to $5.5k will all add up to a fair bit of redistribution, more, [if it happens], than we ever got from the Chretien Liberals.

    Given the challenges you cite (resource cycle rolling over, inflated asset prices), the NDP is better off on the sidelines in some ways. Especially since history generally hasn’t been kind to junior partners in coalition governments (how many Lib Dems got elected last election in the UK?)

    The Bank of Canada has been very nice to the Conservatives over the years, we’ll see if they play as nicely with the Liberals in charge (probably, but not a certainty).

    I don’t think Trudeau is as onside with the petrostate as you think. In the end, the Liberals are the party of Quebec and Ontario with a handful of seats in resource areas and this will tell in how they govern.

    I think you overestimate how Jack would have done. Canadian politics are very stable under the surface. Even when Mulroney’s Conservatives had their meltdown, outside of Ontario most of their vote when to new parties (Reform, Bloc) rather than go to the Liberals or NDP.

    The low Liberal vote total last time was an aberration due to the incredibly insane plan by the party establishment to put up Iraq War fan and torture supporter Ignatieff as the leader. Hell, if forced to make a choice I would have voted for Harper ahead of Ignatieff and I can’t say that about many Canadians.

    Once the Liberal establishment was humiliated into accepting that they had to at least pretend to represent the wishes of the typical Liberal voter it was only a matter of time before they returned to their usual polling levels, although even if you hate the Liberals (and I can understand why many would), I think you have to admit that Trudeau has been effective as leader in attracting good candidates, rebuilding the finances, campaigning, etc.

    Sure, the Conservatives didn’t get wiped out, but when you consider that they were the only right of centre party on offer (say what you will about the Liberals but legalizing marijuana, raising taxes on the rich, increasing the number of refugees admitted, increasing aboriginal funding, tightening environmental rules, reducing military spending, withdrawing from Syria, etc. is not exactly a right wing platform) and they only got 30% of the vote, that’s probably about as low as the right wing vote can go (pretty close to the 27% crazification factor) in this country.

    For the next few years, as you say, the big question is how Liberal actions line up with their promises. As elected dictators, it will be hard (but not impossible) to find excuses to stand behind for not putting them into action. Having explicitly campaigned on running deficits, crying poor won’t be as an easy a way out as it often is). I fully expect them to sign the TPP and to shelve electoral reform (which I don’t think will surprise or trouble many of their voters) but aside from that, there is a lot in their platform that is worth doing and is doable, so I guess we’ll see.

  12. This is truly an amazing post Ian. Despite my wishing some things differently (Mulcair as a weak campaigner, e.g.) I have to say that on balance it is word and big picture near perfect. Thank you, once again.

    L.

  13. Ian Welsh

    Canadian politics was stable. Yes, exactly. And for decades the wishy washy left have run to the Liberal party to stop the big bad Conservatives.

    That was and is a stable situation, and since those people were the difference between losing or winning, in many cases, it was easy to imagine that if the NDP was the obvious alternative they could become that party, and once established in people’s minds that they were the alternative, it could easily have stuck.

    Even if it didn’t, you need only one NDP government to change out of FPP the post and make strategic voting a thing of the past. (And the NDP credibly would have made those changes.)

    A lot was at stake in this election.

    I would give up all the nice things the Liberals ran on for electoral reform and universal pharmacare (though the NDP offered much more.)

    Properly done electoral reform turns Canada into a firm center-left nation for the at least a generation and possible generations. It makes a repeat of someone like Harper impossible for at least a generation or two.

    This is a big deal.

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